In a recent post, I suggested that you save more for yourself than you pay to the government. You can learn how to calculate how much you are paying to the government by following this link.

In today’s post, I want to expand on that topic and talk about how much you are saving. 

But first, let’s cover the basics…

What Qualifies as Saving?

Some people believe that having savings simply means that you have cash on hand that you haven’t spent yet.

And while that’s certainly part of it, I would argue that this definition leaves out a key point — intention. 

For what it’s worth, I define saving not as the absence of spending, but rather the intentional act of setting money aside for a specific goal or purpose.

That purpose could be for a rainy day, retirement, vacation, braces for your kids, or even paying down debt (*which we’ll cover in a sec.). 

However you define it, if you’re intentionally putting money away for a future (more than a few months) purpose, you are saving. 

Paying Down Debt as a Form of Saving

The act of saving is an action step that moves your financial situation forward and improves your chances of achieving financial independence. 

This includes the traditional view of putting money into savings and investment accounts, as well as paying principal payments on debts. If you have debt (especially high-interest consumer debt), paying that down is one of the best ways for you to move your finances forward. 

For that reason, I include these payments in the ‘Saving’ category — partly because “Saving” is just easier to remember than “action steps that move your financial situation forward and help you achieve financial independence.”  

Additionally, once the debt itself is paid off, you can redirect those principal payments you had been making to a new savings strategy i.e. Maxing out your Roth IRA, 401, 403, TSP or whatever proactive savings plan you would like.  I am not a fan of replacing one debt with another (swapping out one car payment for another one), so let’s try to avoid those.

Everything that Qualifies as Saving

Employer contributions to retirement savings should also count toward your savings total.  If your employer is contributing to your retirement savings, it’s my position that you should include that in your overall financial view. It may not be dollars that you are putting into your own savings, but it certainly adds to the total savings that you’ll have once you retire.

In addition to employer-based savings, here are a few of the most common savings vehicles that you will count toward your savings total:

What about investment returns?

This is something that (for most of us) we have little control over.  I encourage clients to focus on the things you can control, so I leave this out of the savings total.

Can I count the down payment I made on my real estate?  

Not really.  A down payment on real property is typically something that is made from funds that were saved in other places.  Therefore, your “savings” have already been counted. You are simply re-deploying your funds.

What about a large payment I made?

No.  If you save money in your savings account for years and then use that money to pay off a debt, does the act of paying off the debt count as savings?  No, you already got “credit” for saving the funds as the money was being saved. Moving it from one place to another is closer to reshuffling the cards. It doesn’t mean it is a bad idea, you just don’t get extra credit for it.

How do I account for the money I take out? 

If you take money out of any of your accounts/investments and use it to pay taxes, debt, or other expenses, it must be subtracted from your savings total. 

For example, let’s say that you borrowed money from the equity in your rental property to go on vacation. Or perhaps it was time for you to take money out of Junior’s 529 plan to pay for tuition. 

These withdrawals should be subtracted from the amount of savings you did during the year.

So take the time to add up all the savings you do that are obvious and some of the not so obvious savings and get a clearer picture of your financial situation.

Here is an example:

One Last Savings Tip

There are as many different ways to save as there are colors in a rainbow. If saving is a relatively new concept for you, consider starting small and setting a modest goal (that you’re pretty sure you can reach) for the first month. 

Once you reach it, take the time to bask in that sense of accomplishment.

In the second month, increase it a bit, then a little more in the third month, and so on. Before you know it, you’ll be a dedicated saver — intentionally setting aside money for any big-ticket event/item on the horizon.

If you could benefit from a financial coach that can help your savings plan and improve your financial future in general, we should talk! Click here to schedule a 30-minute (virtual) conversation today! 


We can discuss your unique situation so that you can learn more about Waller Financial and determine if we’re a good match.

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